I have inserted outlined text (I turned text into a vector object) and have placed it into the a single, full-justified text box that spans the entire page. I went to wrap the text offset to 0 and the majority of the text wraps correctly. Where I am running into problems is on, I think, the curved portions of the outlined text. The text drops lines of text down and won't allow me to wrap around sizable blocks of space after what appears to be rounded portions of the outlined text. It wraps around some rounded areas, so it confuses me, though.

I am not sure if I stated this clearly so I have included an example.

I am unable to back the text up to the large empty spaces to the right of the word "See". If I attempt to backspace the line back up, it begins bringing the text from the above line down... not moving the current line up.

Iv'e not been able to reproduce this either. You mention that the option to release a compound path is grayed out, which is odd, but perhaps you you created the outliines by selecting the text in the frame, rather than selecting the frame. If you do that, your text becomes inline anchored frames containing one compound path per line, and as long as the frames containing the paths are anchored you are not able to release them.

If you slect the frame rather than the text before creating the outlines, you get either a single compound path for one one line, or a group of one-line compound paths that can be ungrouped like any other group. If ther is only one line of text there will be no group.

None of that is particularly relevant, though, in my opinion. If things are working correctly it is impossible to select a single character from the compound path and apply a different wrap to it without applying it to the entire path, and if you had released the path, you would lose the counters in "e"s and I see no sign that you had to go back and select all of your counters and fill them with [Paper].

Peter, here is the file which Daniel and I were using. I re-created the issue - if you open this up in InDesign and attempt to backspace the lines up to the missing blocks on the right, you'll see where I'm having the problem.

OK, I'm seeing it now, and I see it with my own outlines made from a differnt font (curious I didn't see it before). I think this may be a quirk, or possibly a bug, in the paragraph composer. It seems to work better if you switch to the single line composer, but it still isn't perfect. If you turn on highlighting for H& J violations you'll see it's almost all not following the rules.

Behaves siimilarly in CS4 and CS6 (didn't try CS5), though the text flow is a bit different.

And .inx makes no difference (which is why I'm thinking quirk or bug).